In an attempt to reduce potential conflicts of interest, U.S. Senators are set to introduce a bill this week that will explicitly prohibit members of Congress and federal government "public servants" from trading individual stocks.
Presently, members of Congress and their aides can hold and trade individual stocks as long as they don't base their investments on non-public information acquired through their legislative roles. However, the bill, presented by Democratic Senator Kirsten Gillibrand and Republican Senator Josh Hawley, would prohibit individuals such as congressional members, their assistants, the President, Vice President, and government executive branch workers from owning individual company stocks, including those in confidential trust funds. They would, however, be allowed to own mutual funds and broad industry and index funds.
The bill also proposes stringent penalties for those who violate the rules. Government workers who contravene the rules would have to forfeit all profits from their stock trading and could face fines of $10,000 or more. Lawmakers who break the rules would face fines amounting to at least 10% of the value of their investment.
On the day the bill was revealed, the University of Maryland's Public Consultation Project announced the results of a poll of 2,625 registered voters, in which 80% of respondents supported prohibiting members of Congress, the President, Vice President, Supreme Court justices, and their families from owning stocks.
The director of the Public Consultation Project, Steven Kull, stated that while there is controversy within Congress about the prospect of a stock trading ban, public opinion is nearly unanimous in favor of the prohibition.
Indeed, reports about introducing related bills have been circulating in the U.S. Congress for several years, but nothing substantial has materialized yet.
Some media outlets noted that there have been more than a dozen bills just this year aimed at reforming stock trading rules for Congress and executive branch personnel.
As reported by the Business Times in February of last year, then-Speaker of the House Nancy Pelosi, who for years emphasized a "free market" approach without interfering in lawmakers' stock trades, finally shifted her stance. The House Committee was in the process of drafting rules and was expected to submit them for a vote within the year. The Senate was also considering several versions of a stock trading ban, with proposals to ban U.S. lawmakers and their relatives from trading stocks likely to see substantial progress.
The article mentioned that a media investigation found that members of Congress and their immediate family traded $631 million in stocks and financial assets in 2021. Of these transactions, 60% were stocks, while the rest were funds, bonds, and other assets. At the end of 2021, an internal congressional discussion began about a "congressional stock trading ban." A public opinion poll showed that 76% of people believe lawmakers and their spouses have an "unfair advantage" in the stock market, with only 5% of respondents favoring lawmakers trading stocks.
